Deviation Leads to Aggravation

Archive for November, 2007

Today’s A-Hed in the WSJtells the story of twenty-six Trappist monks at St. Sixtus Abbey in Belgium who have found themselves cursed by the trappings of success. Since 1839, the bald-headed brewers have been selling Westvleteren beer in order to cover the basic expenses of the monastic lifestyle. Problem is, the beers they brew are so good, with one being perhaps the best in the world, that beer drinkers the world over are willing to pay top-dollar for the heavenly concoction–far more, in fact, than would be required to fund the simple life of the Trappists.

To the good Christian monks, who eschew profits as immoral and irrelevant and who do not want increased production to take time away from their spiritual duties, the solution has been to keep production at the same level for over sixty years, to devote no money to advertising or even to label the bottles, to limit the number of cases that any one person can buy (two per month), and to charge about$1.50 per bottle, which is probably less than 1/10th of the market-clearing price. The results have been predictable: there is far too little supply to satisfy demand, and online gray markets have emerged in order to satisfy thirsting consumers the world over.

Now, in my opinion, the gray markets are simply doing what the monks should be doing themselves–that is, charging a price that rations the scarce beer to those who value it most. But because the monks don’t do this themselves (instead trying to ration the beer rather awkwardly with purchase limits), it’s only natural that arbiters elsewhere would. To me, this seems a decent reconciliation: the beer flows to the most demanding mouths, and the monks needn’t taint their piety with profits. The monks, however, are indignant at the emergence of the gray markets and browse the internet daily in order to ask the online vendors to desist.

Religion and commerce have long been uneasy bedfellows because of the distrust surrounding profit. St. Thomas Aquinas, for example, wrote in Summa Theologica that it was immoral to charge more for a product than the costs of producing it plus a reasonable fee. The implication has always been and continues to be that if one earns a large profit, one must somehow be gouging the consumer. Unless coerced, however, no consumer will ever pay more for something than he thinks it is worth. Thus, profits can only result from a creation of value, and the larger the profit, the more value that has been created. Profits are nothing to be ashamed of–they’re a mark of a need or desire well met.

The Trappists monks would no doubt agree with the old aphorism that “virtue is its own reward.” The economist’s immediate retort would be, “Au contraire, my friend–reward is its own virtue.”

Up until the Hundred Years’ War in the 14th and 15th centuries, royal European governments were expected to be funded more or less out of the pockets of the ruling family. Levying taxes directly on the subjects was rare, as governments were obliged to follow the legal maxim of cessante causa cessare debet et effectus (“when cause fails, the consequence should fail”). In other words, taxes could only be levied in exceptional circumstances (such as for a war), and when the circumstance ended, so did the tax. In the nearly fifty-year reign of Henry III during the 13th century, for example, taxes were levied directly on royal subjects only five times. Because the Hundred Years’ War lasted so long, however, taxes began to be collected more and more frequently, and soon enough annual taxation became a normal occurrence.

Occasional flights of fancy notwithstanding, it is not often that I would consider living in the 13th century as preferable to present day–yet fiscal policy seems to have been, in its own way, far more sensible. Of course, if I had lived in the Late Middle Ages, one out of every three people I knew would have been dead by the time I turned eighteen.

Well, the comments got started off a bit slowly, but in the end I’m satisfied with the reader participation in response to the query posed in my last post.

None of you, however, was able to guess correctly. I did not go to Hamburg for the Balzac coffee (though I do believe I walked past a Balzac coffee shop), nor did I go to stage a visit with other PPPlers or to buy a new computer. And no, Fig, I did not go to “eat a genuine Hamburger”–the capitalization in that sentence has the most unfortunate implications.

I’m making a trip to Hamburg today. In fact, I’d already be on my way if some old lady hadn’t stopped me to ask how to use the ticket machine and delayed me just long enough so that I looked like an idiot pressing the “door open” button on the train to no avail just seconds before it pulled away.

I thought I’d take the two hours until the next train that the old lady generously afforded me to give my hitherto lethargic readers yet another chance to actively engage with my little corner of the blogosphere. I’ve been disappointed with reader participation so far–the only person who regularly contributes is Figment J. Fictition (Fig for short), and even he has his moments of indifference.

So I pose a question to you, the loyal readers of TRZ: I am going to Hamburg for one specific reason today–why?

First reader to answer correctly in the comments wins a coupon good for one (1) free hug. Fig’s told me he’s already Googling for the answer furiously, so you best get a move on!

Though I enjoy occasionally indulging in a scoop of Beluga piled atop a crisp blin as much as the next fellow, I nonetheless remain skeptical of much of the hype surrounding high-priced “premium” food brands. Whenever someone gushes about how Brand A tastes “soooo much better” than anything else, my first reaction is always to want to stage a blind taste test and see just how precise Erin Exageroo’s palette really is.

I’ve been this way ever since I read a Reader’s Digest article as a young lad which described some research done by a marketing firm. In one experiment, test subjects were given a number of different sticks of deodorant and asked to give an evaluation of each stick. Unbeknownst to the test subjects, however, each stick was made from the same formula–the only difference was in how each stick was packaged. Despite this fact, test subjects were quick to claim a certain brand as having a more pleasant fragrance than others, or maintain that while Brand E may have worked just fine, Brand C irritated their skin. Needless to say, I’ve had a healthy respect for the power of suggestion ever since.

Because of this, I’ve found myself in a pickle these past few days–well, actually, it’s more of a carrot.

A few days ago I was at a small get-together, and at one point in the evening the hostess brought out a bowl of baby carrots as an appetizer. As I was reaching to snatch one up, the hostess mentioned that they were the organic, more expensive type of baby carrots.

“I’ll bet they are, Erin Exageroo,” I couldn’t help muttering under my breath.

But then I took a bite, and reader, believe me when I tell you that I have never tasted such a delicious carrot, whether it be in its suckling infancy or fully matured and ready to head off to carrot college. Each bite was more pleasurable than the next, negating all I had learned in college about diminishing marginal utility. Unable to control my carrot-lust, I filled myself to engorgement, completely disregarding all that Emily Post had ever taught me in the way of proper dinner party conduct. The remainder of the night was spent intermittently vomiting up substances that looked as if they’d come from a clown and restlessly composing the most passionate carrot poetry man has ever known.

But as I sit here now I’m unconvinced. So many things could have tainted my perception–were the carrots delicious only because they were organic, or were there environmental factors at play as well, such as ambient lighting or the color of the bowl? Might the carrots have merely played well off of the rosé I had been sipping? These questions haunt me like a jarringly bad simile.

I have but one solution. Soon, I will buy a selection of different brands of baby carrots and, eliciting the help of a volunteer, submit myself to a blindfolded baby carrot taste test–WITHOUT THE AID OF A NET!

Greenville County — rich in natural beauty and a quality of life unsurpassed anywhere. Not surprisingly, Greenville has seen growth that most of us could not have imagined.

With that growth, however, come [sic] new pressures: flooding, erosion, sedimentation control, water and air quality and how to protect property owners who are next to new development — the ones where every living thing is destroyed on site.

Downstream property owners may find their property flooded and their creeks, streams and ponds filled with sediment. In many cases, after development is complete there are new homes, malls, acres of asphalt and a landscape that barely resembles anything natural…

So, what do we do? In large measure because of the pleas from people in parts of the county reeling from explosive growth, Greenville County Council formed the Tree Policy Advisory Committee…I chaired the committee and we worked for more than two years…after reasoned debate we all agreed on one thing — Greenville County needs a Tree Conservation Ordinance.

My first impression upon reading my father’s editorial is that his writing style is perhaps better suited to the legal briefs he’s written for thirty years rather than the sort of impassioned eco-plea that’s contained in the article. I physically cringed upon reading his closing sentence, which states that the ordinance would be good for “GREENville County.”

I’ve debated my dad before about the merits of this ordinance, and I think the arguments for it are as bare as a deciduous tree in wintertime. I fully support regulations that would penalize developers for any negative externalities that emerge from their development (e.g. pollution, flooding, congestion), but I do not support land-use regulations imposed purely for the aesthetic sensibilities of entrenched residents who bear none of the cost that such regulations bring. The tree ordinance–though my father would like you to believe otherwise–is such a regulation.

There’s a reason developers build neighborhoods the way they do: it’s cheaper, and for some strange reason, people seem to like being able to afford decent-quality housing despite the fact it’s on a “lifeless” quarter-acre plot that my father finds so abhorrent. Imposing any costly regulation will cause a reduction in supply at the margin and raise the prices of homes; this is justifiable in some circumstances, but this particular ordinance would function as a tax on future homeowners to subsidize the prejudices of existing residents (Arthur Pigou would roll over in his grave at the perversity!).

Dad, while admitting that the ordinance would cause homes to become less affordable, hastens to claim that the cost of conserving the trees is offset by the increased market value of the property. If this were true, then why aren’t developers already doing it? If it didn’t cost anything for developers to leave the trees intact, then they are actually wasting money by cutting the trees down–this implies a level of incompetence that should have developers bristling!

Point is, markets do a remarkable job of taking into account non-territorial preferences, something which local political action simply cannot. If one believes the market is failing to account for certain externalities, then one should adopt measures that get to the heart (root?) of the problem in a way that brings about the most benefit for the least cost. One should not, however, impose a regulation based on preference and THEN attempt to rationalize its existence with decidedly hazy arguments about problems it might help to solve.

I’m afraid that, in the case of this ordinance, my father can’t see the forest for the trees.